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Law > 2: Contract Formation > Flashcards

2: Contract Formation Flashcards

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1
Q

What is a simple contract?

A

A contract that does not need to be in writing (oral)

Consideration may be sufficient, not adequate

Seller owes no duty to buyer!

Principle of caveat emptor (buyer aware) means the buyer cannot protect themselves

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2
Q

4 types of contract that must be in writing?

A

Bills of exchange

Regulated Customer Credit Agreement

Transfers of land (evidenced by deed, a speciality contract)

Guarentees

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3
Q

3 times where people do not have capacity for contract?

A

A minor (under 18) is voidable

Unsound mind and drunkards do not have the capacity to enter into contracts

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4
Q

What is a void contract?

A

Not a contract at all!

Ie. illegal contracts, ones contrary to public policy

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5
Q

What is a voidable contract? When does this happen?

A

One that can be set aside at the choice of the injured party

  • Lack of capacity
  • Lack of free will
  • Contract made due to a representation
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6
Q

What is an unenforceable contract!

A

A valid contract, but if either party fails to fulfil their part of the contract, may not be able to compel them to do so

Cant be enforced

  • contract not in the correct form
  • must be in writing but not in writing
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7
Q

What terms must be in a contract?

A

Whatever terms the parties wish!

Courts may intervene if the one party gets unfair advantage due to a stronger bargaining position

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8
Q

What is a contract?

A

A legal agreement between two or more parties

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9
Q

What are the four elements of a contract?

A

Offer

Acceptance

Consideration

Intention to be legally bound

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10
Q

What is an offer?

A

A definite promise to be bound on specific terms

Made by the offeror to the offeree

Offeree can be a particular person, a class of persons, or even the whole world!

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11
Q

What is NOT an offer?

A

Invitation to treat/tender

Statement of intention

Supply of information

Request for information

Vague statements

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12
Q

6 types of invitation to treat?

A

Most adverts

Shop window displays

Goods on shop shelves

Company prospectus

Circulation of price list or displays on a website

Tenders

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13
Q

What are the four types of offer termination?

A

Rejection and counter offer

Revocation

Lapse of time

Failure of a pre-condition

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14
Q

What is rejection?

A

An offeree turns down the original offer

Can be express or by way of a counter offer

Request for new info about the offer is not rejection!

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15
Q

What is revocation?

A

When an offeror withdraws his or her offer

Can be made at any time before acceptance

Can be made even if they said they’d keep the offer open

Must be communicated to the offeree by the offeror or by a reliable third party

Exception:
- offeree has paid to keep offer open, collateral contract, offeree can claim damages
- unilateral contract

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16
Q

What is a unilateral contract?

A

One made to the whole world

It would be virtually impossible to revoke

17
Q

What is lapse of time?

A

Offer ceases to exist if not made within a specific time limit

If no time limit, then lapse after a reasonable time

Lapses on death of offeree

18
Q

What is failure of a pre-condition?

A

A ‘conditional’ offer is one depends on a specified event or change in circumstances

If not met, offer over

19
Q

What is acceptance and how is it done?

A

Unequivocal and unconditional assent to all terms of the offer

Can be verbal, in writing or inferred by conduct

Silence is not acceptable

Acceptance must always be communicated unless offeror dispenses with that requirement

20
Q

What are the timings of acceptance, due to methods?

A

Fax - communicated when it is RECEIVED by a person (in business hours)

Post - acceptance as soon as the letter is posted!
- applies even if the letter is never received, unless contract says otherwise
- revocation only made when letter received

Email - when acceptance is received by offerer’s email system and available to read

21
Q

What is consideration?

A

Act or forbearance, price of a promise

Price by which one party bought the other party’s act or promise

Simple contracts - necessary
Deeds - not necessary

Must be SUFFICIENT but not necessarily ADEQUATE

Sufficient means capable of being given a value

22
Q

Types of consideration?

A

Executed
- a performed act at time of agreement

Executory
- promise given in exchange for promise

Forbearance/waiver of rights
- one of the parties forfeit rights to something, consideration if can be assigned a value!

23
Q

What is not good consideration?

A

Past consideration
- unless in response to a specific request

Existing statutory duty
- has to be over and above that

Existing contractual duty
- unless exceeded
- or new contract with third party
- or contract gives additional practical benefit not anticipated

Promise to do an illegal act!

Waiver of existing debt (part payment)
- payment if a lesser sum cannot do
- exceptions:
- alternative consideration
- bargain or agreement between creditors
- payment by third party

24
Q

What are the two presumptions in the intention to create legal relations?

A

Domestic relations
- no intention to be legally bound in a social or domestic arrangement
- can be overturned with clear evidence
- presumption rebutted if spouses were not living happily together at time of agreement

Commercial agreement
- Intention TO be legally bound
- can be overturned with evidence (reluctantly by court!)

Subject to contract - presumption there is no intention to create an immediately binding contract

25
Q

What is privity and the exceptions?

A

Only the parties to the contract can enforce/ be sued under it

Exceptions:
- Contracts (Right of Third Parties) 1999. A person can enforce if contract was for their benefit, and they were identified expressly by name of description
- Trust. Beneficiary can enforce a trust to enable them to enforce their rights
- Agency. Principal and third party have enforceable rights under that contract

26
Q

What is a term v representation?

A

Term - part of the contract

Representation - something said by the offeror to induce the offeree to enter into the contract. Become a term once included in the written contract
- remedies can be claimed for misrepresentation

27
Q

What are express terms?

A

Specifically agreed

Written, oral or combination

Specifically inserted into contract

Must be clear to be enforceable

28
Q

What are implied terms and the four types?

A

Not expressly included

  1. Implied due to type of contract
  2. Implied to give business efficacy (make the agreement work)
  3. Implied due to custom and usage
  4. Implied by Acts of Parliament/statute/courts
29
Q

What is the factual matrix?

A

When, in dispute between contracting parties, courts looks at the contract objectively to determine which terms should apply

Law (13 decks)

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